IT major Wipro will acquire London-based global management and tech consultancy Capco for USD 1.5 billion to bolster its presence in the banking, financial services & insurance (BFSI) space.

The acquisition of consulting businesses has typically not been fruitful for the Indian technology services industry, and market participants fear that the buyout of Capco might end up on a similar track. The success and the challenge of the buyout, however, will depend on how Wipro uses its cross-selling opportunities and integrates the two companies, analysts said.

 "Wipro's track-record on that score from acquisitions over the last two decades has been less than average," Nirmal Bang Institutional Equities said. Another reason for scepticism is around the price paid for Capco. For a company valued around $800 mln in 2017 and seeing a fall in sales since then, Wipro is paying nearly 75% more for the company, analysts pointed out.

The buyout will also help Wipro become an integrated, end-to-end consulting and digital transformation player. While Wipro has done more acquisitions than any other in the industry, it has not managed to match the industry's growth rate even in a single year over the last 10 years.

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